Box ships’ price war could eventually hurt shippers—Drewry

Shippers might be the beneficiaries of the current price war among ocean container carriers, but the tumbling rates could also bring negative consequences for them, according to Drewry Maritime Research’s latest monthly Sea & Air Shipper Insight.

Carriers’ reported earnings for the first quarter of 2013 have been mixed, similar to the results in 2012. “Some carriers made a little money but more lost cash, meaning that the industry at large started 2013 in the red,” said Drewry in a media release today.

The second quarter has been worse, with rates free-falling since the start of the year, particularly in the core Asia-Europe westbound trade where Shanghai-to-Rotterdam spot rates as assessed by the World Container Index have lost half their value.

“Carriers will be forced to curb their losses somehow. Service quality might be forsaken as some operators might ask what benefit they get from offering reliable port-to-port services,” said Simon Heaney, research manager at Drewry.

Heaney added, “We expect the first step to be further slowing down on ship speeds, which in itself should not lessen reliability but will lengthen transit times even more. After that, if they are still losing cash, the incentive to offer reliable services will be sorely tested.”